This monograph addresses three issues in contemporary Egypt: failures of governance and political development, the continued strength of Islamism, and counterterrorism. It is easier to tackle their contours in Egypt if they are considered separately. They are not, however, separate or independent; continuing to treat them as mutually exclusive conditions will lead to further crisis down the road. Egyptian failures of governance have taken place through three eras: monarchy and the liberal experiment, the period of Arab socialism, and Egypt's reopening to the West under Presidents Sadat and Mubarak. In combination with a large military and security establishment in Egypt, these failures meant a continuing authoritarian government has served and used its military and security apparatuses to block significant political transformation. The failures of governance provide grievances for Islamist militants and moderates, and also for many ordinary Egyptians, and inhibit the growth of political or civic maturity. The Egyptian government forged a truce with its most troublesome Islamist militants in 1999. However, violence emerged again from new sources of Islamist militancy from 2003 into 2006. All of the previously held conclusions about the role of state strength versus movements that led to the truce are now void as it appears that al-Qa'idism may continue to plague the country or, indeed, the region as a whole. In consequence, an important process of political liberalization was slowed, and in 3 to 4 years, if not earlier, Egypt's political security and stability will be at risk. Widespread economic and political discontent might push that date forward. In addition, continuing popular support for moderate Islamism could lead to a situation where the current peace could erode, unless a comprehensive peace settlement to the Palestinian-Arab-Israeli conflict is achieved, and if various other factors were to come into play. A glossary of terms is appended.